Galaxy increases rights issue entitlement proceeds, trading to resume
-- Galaxy shares to resume trading on ASX today following $17.2
million capital raising
-- Balance sheet strengthened, company to focus on production
-- Business operations moving forward with cost reduction review
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION
IN THE UNITED STATES/
PERTH, Australia, Aug. 27, 2013 /CNW Telbec/ - Galaxy Resources Ltd (ASX: GXY)
("Galaxy" or "the Company") advises proceeds raised under its 1 for 1 pro-rata
non-renounceable entitlement offer (Entitlement Offer) and the shortfall have
reached a total $17.2 million, 43% above the minimum required under the
raising of $12 million.
The Company also advises that its shares will recommence trading on the ASX
The proceeds from the raising to date will be used for partial debt pay down
to Chinese lenders, working capital for the Jiangsu Lithium Carbonate Plant
(Jiangsu) in China and the Sal de Vida Lithium Brine and Potash Project (Sal
de Vida) in Argentina, and to pay costs associated with the raising.
Galaxy Interim Managing Director Anthony Tse said: "We are pleased to have
received solid shareholder support to date, which has included participation
from our major shareholders M&G and Deutsche Bank. Our strengthened balance
sheet position under the rights issue will allow us to implement a range of
strategic initiatives, manage our finances and progress our operations.
"We believe that the successful raising, together with ongoing balance sheet
initiatives will allow the Company to focus on its operations and production
ramp up. Moreover, we remain firmly committed to our strategy of becoming a
significant global lithium producer."
The recently-formed Special Management Committee is overseeing a number of
financial and operational restructuring initiatives. The primary goal is to
reduce costs and overall debt. This will include a review of the composition
of the Company's Board and management and the potential sale of non-core
assets within the Company's portfolio.
As part of the Company's ongoing balance sheet restructuring, management has
recently concluded a successful negotiation with the Company's convertible
bondholders to restructure its outstanding $61.5 million 8% convertible bonds
previously redeemable on 19 November 2013. The outstanding convertible bonds
were an issue of concern for a number of Galaxy's investors, and the
restructuring now alleviates a significant cash need in November this year, as
well as providing a means by which some of that outstanding convertible bond
debt can be converted into equity. For any principal and accrued interest
outstanding as at 19 November 2013, bondholders can continue to hold the bonds
until the maturity date of 19 November 2015 with a 2% increase in the coupon
rate to 10% coupon per annum or convert the remaining bonds into shares and
receive 1.5 options per share (on the same terms as the Entitlement Offer).
In addition, Galaxy has managed to pay down or reschedule near term payments
due under its total of $113 million in loans with China Construction Bank,
Industrial and Commercial Bank of China, and Shanghai Pudong Development Bank,
further alleviating short term funding requirements. Discussions are
continuing with these banks to achieve an overall debt profile that is better
aligned with the current developmental stage of the business and its cashflows.
Galaxy has committed to reducing corporate costs in 2013 from $17.6 million in
2012 to $12.2 million. In the next 12 months, further costs savings of $7.0
million are targeted.
The ramp-up of the Jiangsu Plant continues to progress and, as previously
announced, the Company will now focus on accelerating the ramp-up to full
production capacity. Jiansgu remains a core strategic asset for Galaxy as it
increases production and sales of lithium carbonate and the Company remains
confident of reaching a cash flow break even status at the Jiangsu operation
later in the year.
Similarly, Sal de Vida remains a key strategic project for the Company.
Discussions are continuing around project funding and development while the
Company continues to assess various alternative options.
About Galaxy (ASX: GXY)
Galaxy Resources Ltd ("Galaxy") is an Australian-based global lithium company
with lithium production facilities, hard rock mines and brine assets in
Australia, China, Canada and Argentina. The Company is a lithium producer
listed on the Australian Securities Exchange (Code: GXY) and is a member of
the S&P/ASX 300 Index.
Galaxy has built an advanced and fully-automated Lithium Carbonate production
facility in Jiangsu Province, China ("Jiangsu Plant"). The Jiangsu Plant has a
name-plate capacity of 17,000 tpa, is primarily focused on producing battery
grade lithium carbonate, and is aiming to become the largest producer in the
Asia Pacific region and the fourth largest in the world.
Galaxy is currently advancing plans to develop the Sal de Vida Lithium and
Potash Brine Project ("Sal de Vida") in Argentina, which is situated in the
Lithium Triangle, a region where Chile, Argentina and Bolivia meet, and
presently accounts for 60% of global lithium production. Sal de Vida has
excellent promise as a future low cost production facility.
The Company also owns the Mt Cattlin Spodumene Mine near Ravensthorpe in
Western Australia and the James Bay Lithium Pegmatite Project in Quebec,
Lithium compounds are used in the manufacture of ceramics, glass, electronics
and are an essential ingredient in producing battery materials such as cathode
and electrolyte, in the manufacture of long life lithium-ion batteries, which
are used in consumer electronics, power tools, electric bikes, hybrid and
electric vehicles. Anticipating the growing demand in coming years, Galaxy is
positioning itself to become a major producer of lithium products
Caution Regarding Forward Looking Information.
This document contains forward looking statements concerning Galaxy.
Forward-looking statements are not statements of historical fact and actual
events and results may differ materially from those described in the forward
looking statements as a result of a variety of risks, uncertainties and other
factors. Forward-looking statements are inherently subject to business,
economic, competitive, political and social uncertainties and contingencies.
Many factors could cause the Company's actual results to differ materially
from those expressed or implied in any forward-looking information provided by
the Company, or on behalf of, the Company. Such factors include, among other
things, risks relating to additional funding requirements, metal prices,
exploration, development and operating risks, competition, production risks,
regulatory restrictions, including environmental regulation and liability and
potential title disputes.
Forward looking statements in this document are based on Galaxy's beliefs,
opinions and estimates of Galaxy as of the dates the forward looking
statements are made, and no obligation is assumed to update forward looking
statements if these beliefs, opinions and estimates should change or to
reflect other future developments.
Not For Release in US
This announcement has been prepared for publication in Australia and may not
be released in the U.S. This announcement does not constitute an offer of
securities for sale in any jurisdiction, including the United States, and any
securities described in this announcement may not be offered or sold in the
United States absent registration or an exemption from registration under the
United States Securities Act of 1933, as amended. Any public offering of
securities to be made in the United States will be made by means of a
prospectus that may be obtained from the issuer and that will contain detailed
information about the company and management, as well as financial statements.
Corporate Andrew Meloncelli Company Secretary Galaxy Resources Ltd Tel
(office): +61 (0) 8 9215 1700 Email:firstname.lastname@example.org
Media Contact Jane Munday FTI Consulting Tel (office): +61 (0) 8 9485 8888 Tel
(mobile): + 61 (0) 488 400 248 Email:email@example.com
SOURCE: Galaxy Resources Limited
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